How to turn Salesforce into a SaaS Revenue Engine

Seven steps to make Salesforce work for your subscription business.

If you’re a growing SaaS company, chances are you’re using Salesforce as your CRM. Salesforce has been around a long time, and its flexible schema, familiarity among sales reps, and integrations with industry-leading tools like Outreach and Gong make it hard to beat. The trouble is that Salesforce isn’t specifically built for SaaS, so there’s no native subscription logic, which makes it hard to record how ARR changes over time. This means you’ll have to customize Salesforce to make it fit your SaaS business, which can be a major drain on time and money for a start-up. To help, I’ve compiled a list of best practices to turn your Salesforce instance into a full blown SaaS revenue engine without any custom code.

1. Create an Opportunity every time a customer’s ARR changes

An Opportunity is the native Salesforce object for recording sales. For SaaS companies, it’s best to think of each Opportunity as a new contract or contract amendment between you and your customer. Every time you sign a new contract, or make a change to a contract that impacts ARR, you should record that change with a new Opportunity.

2. Use Opportunity “Types” to categorize contracts

By default, Opportunities have a “Type” picklist that can be customized. Use Type to describe the variety of contract or contract amendment the Opportunity represents, which will ensure ARR movements are tracked correctly. You can have as many Opportunity Types are you want, but they should map to one of three contract categories:

  • New Contract: This is a new contract between you and your customer. Typically this is your first contract with a customer, but you could have a secondary New Contract with an existing customer if, for example, you sign a contract with a different business unit that will operate independently of the existing contract.
  • Renewal: A renewal is a contract that is replacing an expiring contract with that customer (either a New Contract or a Renewal). It’s important to designate renewals in order to gain insights into how your customers behave – and how your customer success team performs – when it’s time to re-sign for another year.
  • Co-Termed Contract Amendment: This is a change to an existing contract (either a New Contact or a Renewal) that impacts the ARR of the deal. This typically represents an upsell, where you sell a customer a new product or more seats to your platform.

3. Designate an MRR or ARR Field

Each Opportunity needs to record the recurring revenue it represents. You can use Salesforce’s default “Amount” field for your ARR or MRR, but if you use some of Salesforce’s more advanced features (like Products and Pricebooks) Amount will automatically populate as the Total Contract Value (TCV). In that case, it’s easy to create a custom formula field for MRR or ARR that builds off the Amount field.

4. Record Close Date, Start Date, and End Date

Getting dates right is key to accurate reporting. There are three dates that you should have on each Opportunity:

  • Close Date: This is a default Salesforce field, and should be used to designate the day sales closes the deal, which is often different from the date the contract goes into effect.
  • Contract Start Date: Create a custom date field for the day the contract goes into effect. If you record both Close Date and Contract Start Date, you can use SaaSGrid to toggle between contracted and live ARR.
  • Contract End Date: The last day a contract is in effect. For example, a 1 year contract could have a Contract Start Date of 1/1/2023 and a Contract End Date of 12/31/2023. Ideally, the next Renewal Opportunity would have a Contract Start Date of 1/1/2024, creating no overlap and no gap between contracts. If a contract ever ends early, either because of churn or an early renewal, be sure to change the Contract End Date.

5. For Contract Amendments, record the change in ARR and make sure the Contract End Date matches the original contract

Contract Amendments are one of the hardest things to model correctly in Salesforce. The main difference from New Contracts and Renewals is that for Contract Amendments, it’s best to record the change in ARR so that the original contract ARR plus the amendment ARR sum to the new total ARR. For example, if a $5k ARR contract expands to $7k, the original Opportunity should have $5k ARR and the Contract Amendment Opportunity should have $2k ARR. Conversely, if a customer is contracting the Contract Amendment Opportunity should have negative ARR.

Contract Amendments should always be co-termed, meaning they have the same Contract End Date as the original contract. Marking Contract End Date correctly will help SaaSGrid associate the amendment with the original contract. If an upsell isn’t co-termed, it should be a New Contract Opportunity Type so it operates independently of other contracts.

6. Mark special cases like monthly contracts, pilots, and self-serve customers

It’s not uncommon to have some contracts that don’t fit well into the New Contract→ Contract Amendment→ Renewal structure. For example, month-to-month contracts continue indefinitely, so there is no end date until the customer churns; pilots are short-term contracts that don’t renew or expand, but rather convert into full-length contracts; some bottom-up companies can have individual users self-serve separately from the enterprise contract. SaaSGrid can accommodate all of these special cases, but it’s important to use custom fields to mark these contracts so the specific logic can be applied.

7. Integrate with SaaSGrid

Implementing the first six rules ensures your SaaS contract data is complete. Finally, you'll need to integrate with SaaSGrid to visualize your SaaS metrics. SaaSGrid interprets all your Salesforce Opportunities to measure your company's growth, retention, and efficiency, and empowers you to drill-down into the underlying customers and contracts that are driving change. SaaSGrid also automatically audits your Salesforce records to ensure your contracts follow the above rules, and flags any potential issues for review. If you have specific questions about your Salesforce instance or are ready to integrate with SaaSGrid, reach out to hello@saasgrid.com to get started.

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